"We had strong operational performance in the quarter, delivering double-digit growth in our U.S. Branded Sterile Injectables business and in the Specialty Products portfolio of our U.S. Branded - Specialty & Established Pharmaceuticals business," said Paul Campanelli, President and Chief Executive Officer of Endo. "We are focused on enhancing our capabilities in these businesses through the Somerset/Wintac acquisition, which we anticipate will close during the first quarter of 2019, and on our planned expansion into the medical aesthetics market. On that front, I am extremely pleased with the previously reported positive results from the Phase 3 CCH for cellulite clinical trials and I look forward to taking the next steps to bring this treatment to patients."

FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

Change

2018

2017

Change

Total Revenues

$

745,466

$

786,887

(5)

%

$

2,160,689

$

2,700,218

(20)

%

Reported Loss from Continuing Operations

$

(146,071)

$

(99,687)

47

%

$

(696,288)

$

(961,130)

(28)

%

Reported Diluted Weighted Average Shares

224,132

223,299

—

%

223,829

223,157

—

%

Reported Diluted Loss per Share from Continuing Operations

$

(0.65)

$

(0.45)

44

%

$

(3.11)

$

(4.31)

(28)

%

Adjusted Income from Continuing Operations

$

164,845

$

204,052

(19)

%

$

487,823

$

686,498

(29)

%

Adjusted Diluted Weighted Average Shares1

232,358

224,216

4

%

228,195

223,779

2

%

Adjusted Diluted EPS from Continuing Operations

$

0.71

$

0.91

(22)

%

$

2.14

$

3.07

(30)

%

__________

(1)

Diluted per share data is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact of share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact.

CONSOLIDATED RESULTS

Total revenues were $745 million in third-quarter 2018 compared to $787 million in the same period in 2017. This performance was primarily attributable to competitive pressures and product discontinuations in the U.S. Generic Pharmaceutical segment, the divestiture of the Company's Mexican business, Somar, and the voluntary market withdrawal of OPANA® ER. These factors were partially offset by the launch of ertapenem for injection, the authorized generic of INVANZ®, and continued strong growth in the U.S. Branded - Sterile Injectables segment.

GAAP net loss from continuing operations in third-quarter 2018 was $146 million compared to GAAP net loss from continuing operations of $100 million during the same period in 2017. This result was primarily attributable to the gross margin impact of the quarter's revenue reduction and increased asset impairment charges. GAAP diluted net loss per share from continuing operations for third-quarter 2018 was $0.65 compared to GAAP diluted net loss per share from continuing operations of $0.45 in third-quarter 2017.

Adjusted income from continuing operations in third-quarter 2018 was $165 million compared to $204 million in third-quarter 2017. This performance was primarily attributable to the divestiture of Somar and the voluntary market withdrawal of OPANA® ER. Adjusted diluted EPS from continuing operations in third-quarter 2018 was $0.71 compared to $0.91 in third-quarter 2017.

U.S. BRANDED - SPECIALTY & ESTABLISHED PHARMACEUTICALS

In November 2018, the Company reported positive results from two Phase 3 clinical trials of collagenase clostridium histolyticum (or "CCH") for the treatment of cellulite in the buttocks. Trial subjects receiving CCH showed highly statistically significant levels of improvement in the appearance of cellulite with treatment, as measured by the trial's primary endpoint.

Revenues of $220 million compared to $234 million in third-quarter 2017; this performance was primarily attributable to the voluntary cessation of OPANA® ER shipments in third-quarter 2017. Excluding the impact of OPANA® ER, revenues were consistent with third-quarter 2017.

Revenues of $237 million, an increase of 17 percent compared to third-quarter 2017. This increase was primarily attributable to the launch of ertapenem for injection and the continued strong growth of ADRENALIN® and VASOSTRICT®.

U.S. GENERIC PHARMACEUTICALS

During third-quarter 2018, the U.S. Generic Pharmaceuticals segment launched 3 products, including colchicine tablets, the authorized generic of COLCRYS®, which was the result of a first-to-file paragraph four settlement agreement.

Third-quarter 2018 U.S. Generic Pharmaceuticals results include:

Revenues of $258 million compared to $295 million in third-quarter 2017; this performance was primarily attributable to competitive pressures in the generic business and previously announced product discontinuations, partially offset by the launch of colchicine tablets.

INTERNATIONAL PHARMACEUTICALS

Third-quarter 2018 International Pharmaceuticals revenues were $30 million, compared to $56 million in the same period in 2017. This performance is primarily attributable to the Somar divestiture in the fourth-quarter of 2017.

2018 FINANCIAL GUIDANCE

For the full twelve months ending December 31, 2018, at current exchange rates, Endo is raising its financial guidance. The Company now estimates:

Total revenues to be between $2.87 billion and $2.92 billion;

Adjusted diluted EPS from continuing operations to be between $2.65 and $2.75; and

Adjusted EBITDA from continuing operations to be between $1.32 billion and $1.34 billion.

The Company's 2018 non-GAAP financial guidance is based on the following assumptions:

Adjusted gross margin of approximately 68.5%;

Adjusted operating expenses as a percentage of revenues of approximately 27.0%;

Adjusted interest expense of approximately $525 million;

Adjusted effective tax rate of approximately 8.5% to 9.5%; and

Adjusted diluted weighted average shares outstanding of approximately 230 million.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of September 30, 2018, the Company had $1.1 billion in unrestricted cash; debt of $8.3 billion; net debt of approximately $7.1 billion and a net debt to adjusted EBITDA ratio of 5.3.

Third-quarter 2018 cash used in operating activities was $22 million, compared to $83 million of net cash provided by operating activities in the comparable 2017 period.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release today at 8:00 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 6154109. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from November 8, 2018 at 11:00 a.m. ET until 11:00 a.m. ET on November 11, 2018 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 6154109.

VOLTAREN is a registered trademark of Novartis Corporation
COLCRYS is a registered trademark of Takeda Pharmaceuticals U.S.A., Inc.
INVANZ is a registered trademark of Merck Sharp & Dohme Corp.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total Revenues for the three and nine months ended September 30, 2018 and 2017 (dollars in thousands):

Three Months Ended September 30,

Percent
Growth

Nine Months Ended September 30,

Percent
Growth

2018

2017

2018

2017

U.S. Branded - Specialty &
Established Pharmaceuticals:

Specialty Products:

XIAFLEX®

$

64,214

$

52,511

22

%

$

184,855

$

152,113

22

%

SUPPRELIN® LA

20,408

20,638

(1)

%

60,948

63,468

(4)

%

Other Specialty (1)

43,576

40,634

7

%

114,202

113,407

1

%

Total Specialty Products

$

128,198

$

113,783

13

%

$

360,005

$

328,988

9

%

Established Products:

PERCOCET®

$

30,730

$

31,349

(2)

%

$

93,539

$

93,183

—

%

VOLTAREN® Gel

15,057

19,102

(21)

%

44,185

53,646

(18)

%

OPANA® ER

—

14,756

(100)

%

—

82,056

(100)

%

Other Established (2)

46,115

54,813

(16)

%

135,243

171,277

(21)

%

Total Established Products

$

91,902

$

120,020

(23)

%

$

272,967

$

400,162

(32)

%

Total U.S. Branded - Specialty &
Established Pharmaceuticals (3)

$

220,100

$

233,803

(6)

%

$

632,972

$

729,150

(13)

%

U.S. Branded - Sterile Injectables:

VASOSTRICT®

$

112,333

$

105,741

6

%

$

332,387

$

300,649

11

%

ADRENALIN®

35,460

25,335

40

%

101,858

50,464

NM

Ertapenem for injection

25,798

—

NM

25,798

—

NM

Other Sterile Injectables (4)

63,559

70,829

(10)

%

210,804

203,252

4

%

Total U.S. Branded - Sterile Injectables (3)

$

237,150

$

201,905

17

%

$

670,847

$

554,365

21

%

Total U.S. Generic Pharmaceuticals

$

257,969

$

294,749

(12)

%

$

748,445

$

1,227,584

(39)

%

Total International Pharmaceuticals

$

30,247

$

56,430

(46)

%

$

108,425

$

189,119

(43)

%

Total Revenues

$

745,466

$

786,887

(5)

%

$

2,160,689

$

2,700,218

(20)

%

__________

(1)

Products included within Other Specialty include TESTOPEL®, NASCOBAL® Nasal Spray and AVEED®.

(2)

Products included within Other Established include, but are not limited to, LIDODERM®, EDEX®, TESTIM® and FORTESTA® Gel, including the authorized generics.

(3)

Individual products presented above represent the top two performing products in each product category and/or any product having revenues in excess of $25 million during any quarterly period in 2018 or 2017.

(4)

Products included within Other Sterile Injectables include, but are not limited to, APLISOL® and ephedrine sulfate injection.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share data):

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

TOTAL REVENUES

$

745,466

$

786,887

$

2,160,689

$

2,700,218

COSTS AND EXPENSES:

Cost of revenues

412,965

514,522

1,198,468

1,722,885

Selling, general and administrative

163,791

135,880

478,615

468,675

Research and development

39,683

39,644

160,431

123,522

Litigation-related and other contingencies, net

(1,750)

(12,352)

15,370

(14,016)

Asset impairment charges

142,217

94,924

613,400

1,023,930

Acquisition-related and integration items

1,288

16,641

13,284

31,711

OPERATING LOSS FROM CONTINUING OPERATIONS

$

(12,728)

$

(2,372)

$

(318,879)

$

(656,489)

INTEREST EXPENSE, NET

131,847

127,521

385,896

361,267

LOSS ON EXTINGUISHMENT OF DEBT

—

—

—

51,734

OTHER INCOME, NET

(1,507)

(2,097)

(33,216)

(10,843)

LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAX

$

(143,068)

$

(127,796)

$

(671,559)

$

(1,058,647)

INCOME TAX EXPENSE (BENEFIT)

3,003

(28,109)

24,729

(97,517)

LOSS FROM CONTINUING OPERATIONS

$

(146,071)

$

(99,687)

$

(696,288)

$

(961,130)

DISCONTINUED OPERATIONS, NET OF TAX

(27,134)

3,017

(43,273)

(705,886)

NET LOSS

$

(173,205)

$

(96,670)

$

(739,561)

$

(1,667,016)

NET (LOSS) INCOME PER SHARE—BASIC:

Continuing operations

$

(0.65)

$

(0.45)

$

(3.11)

$

(4.31)

Discontinued operations

(0.12)

0.02

(0.19)

(3.16)

Basic

$

(0.77)

$

(0.43)

$

(3.30)

$

(7.47)

NET (LOSS) INCOME PER SHARE—DILUTED:

Continuing operations

$

(0.65)

$

(0.45)

$

(3.11)

$

(4.31)

Discontinued operations

(0.12)

0.02

(0.19)

(3.16)

Diluted

$

(0.77)

$

(0.43)

$

(3.30)

$

(7.47)

WEIGHTED AVERAGE SHARES:

Basic

224,132

223,299

223,829

223,157

Diluted

224,132

223,299

223,829

223,157

The following table presents unaudited Condensed Consolidated Balance Sheet data at September 30, 2018 and December 31, 2017 (in thousands):

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD

$

1,430,908

$

1,103,486

SUPPLEMENTAL FINANCIAL INFORMATION

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures. For additional information on the Company's use of such non-GAAP financial measures, refer to Endo's Current Report on Form 8-K furnished today to the U.S. Securities and Exchange Commission, which includes an explanation of the Company's reasons for using non-GAAP measures.

The tables below provide reconciliations of certain of our non-GAAP financial measures to their most directly comparable GAAP amounts. Refer to the "Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures" section below for additional details regarding the adjustments to the non-GAAP financial measures detailed throughout this Supplemental Financial Information section.

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)

The following table provides a reconciliation of Net loss (GAAP) to Adjusted EBITDA (non-GAAP) for the three and nine months ended September 30, 2018 and 2017 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Net loss (GAAP)

$

(173,205)

$

(96,670)

$

(739,561)

$

(1,667,016)

Income tax expense (benefit)

3,003

(28,109)

24,729

(97,517)

Interest expense, net

131,847

127,521

385,896

361,267

Depreciation and amortization (15)

176,856

183,475

521,325

680,385

EBITDA (non-GAAP)

$

138,501

$

186,217

$

192,389

$

(722,881)

Inventory step-up and other cost savings (2)

$

71

$

66

$

261

$

281

Upfront and milestone-related payments (3)

4,731

775

43,027

6,952

Inventory reserve increase from restructuring (4)

207

—

2,797

7,899

Separation benefits and other restructuring (5)

3,794

80,693

79,344

120,078

Certain litigation-related and other contingencies, net (6)

(1,750)

(12,352)

15,370

(14,016)

Asset impairment charges (7)

142,217

94,924

613,400

1,023,930

Acquisition-related and integration costs (8)

519

1,201

1,553

8,137

Fair value of contingent consideration (9)

769

15,440

11,731

23,574

Loss on extinguishment of debt (10)

—

—

—

51,734

Share-based compensation

13,736

13,247

43,722

40,252

Other income, net (16)

(1,507)

(2,097)

(33,216)

(10,843)

Other adjustments

(67)

(58)

(775)

(75)

Discontinued operations, net of tax (13)

27,134

(3,017)

43,273

705,886

Adjusted EBITDA (non-GAAP)

$

328,355

$

375,039

$

1,012,876

$

1,240,908

Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)

The following table provides a reconciliation of our Loss from continuing operations (GAAP) to our Adjusted income from continuing operations (non-GAAP) for the three and nine months ended September 30, 2018 and 2017 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Loss from continuing operations (GAAP)

$

(146,071)

$

(99,687)

$

(696,288)

$

(961,130)

Non-GAAP adjustments:

Amortization of intangible assets (1)

161,275

161,413

471,662

615,490

Inventory step-up and other cost savings (2)

71

66

261

281

Upfront and milestone-related payments (3)

4,731

775

43,027

6,952

Inventory reserve increase from restructuring (4)

207

—

2,797

7,899

Separation benefits and other restructuring (5)

3,794

80,693

79,344

120,078

Certain litigation-related and other contingencies, net (6)

(1,750)

(12,352)

15,370

(14,016)

Asset impairment charges (7)

142,217

94,924

613,400

1,023,930

Acquisition-related and integration costs (8)

519

1,201

1,553

8,137

Fair value of contingent consideration (9)

769

15,440

11,731

23,574

Loss on extinguishment of debt (10)

—

—

—

51,734

Other (11)

1,353

3,035

(29,908)

(1,133)

Tax adjustments (12)

(2,270)

(41,456)

(25,126)

(195,298)

Adjusted income from continuing operations (non-GAAP)

$

164,845

$

204,052

$

487,823

$

686,498

Reconciliation of Other Adjusted Income Statement Data (non-GAAP)

The following tables provide detailed reconciliations of various other income statement data between the GAAP and non-GAAP amounts for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share data):